Jefferies Lowers Alibaba Target to $185 as Qwen Marketing Costs Rise
Jefferies cut Alibaba’s U.S. share target to $185 from $212, citing 3 billion yuan Lunar New Year promotions and higher marketing outlays for its Qwen AI assistant that will pressure near-term earnings. Alibaba’s cloud segment posted 36% revenue growth driven by 600 million Qwen downloads and AI products exceed 20% of sales.
1. Jefferies Lowers Price Target
Jefferies reduced its target for Alibaba’s U.S. stock to $185 from $212 while reaffirming its buy rating. The brokerage cited elevated marketing expenses for the Qwen AI assistant and larger subsidies in its “All Others” segment as key headwinds for near-term profits.
2. Qwen AI Marketing and Promotions
Alibaba allocated 3 billion yuan (≈$431 million) for Lunar New Year promotions aimed at accelerating adoption of the Qwen app. The company also launched the Happy Horse text-to-video AI tool, marking a milestone in its expansion of generative AI services.
3. Cloud Intelligence Growth
The cloud intelligence segment achieved 36% revenue growth year-over-year, powered by over 600 million downloads of the Qwen model. AI-driven products now account for more than 20% of external sales, extending a streak of triple-digit growth spanning ten quarters.
4. Quick Commerce Outlook
Jefferies noted that losses in Alibaba’s quick commerce operations could narrow significantly in the March quarter and may decline by half in fiscal 2027, reflecting the company’s efforts to optimize its logistics and delivery infrastructure.